Relating the conceptual framework of Jones (1996) to the financial performance of New Balance, an overview on the 2005 sales summary of New Balance can be demonstrated as shown below: Based on the above illustration, New Balance “maximizes” its financial performance as indicated by the results of sales composing of specialty retailers and key retailers. The “minimization” of risks is also indicated by the significant sales contribution of specialty retailers which are considerably “at large outlets” which New Balance has established. The financial performance likewise indicates the “rolling-over” of financing as equated by its liquidity.
Overall, the ratios and financial measures of New Balance in dealing with its capital budget also transpire in achieving the number of accounts and outlets which can be attributed as the key market lines that generate viable financial performance as indicated in the 2005 sales summary. To further elaborate the financial performance of New Balance, it may be found that establishing the specialty and key retailers form part of efficient and effective marketing strategies, expanding the modality of “sales input-output” from consumers that becomes patron and retailers or franchisees.
It is noteworthy to mention that New Balance operates its “supply chain and manufacturing” within and outside the United States. Meaning, capital budgeting is “spread out” within the domestic and international production and marketing areas, from which the specialty and key retailers also come from. SWOT Analysis Based on the case study, the assumed “strengths” of New Balance is adherent to the philosophy, culture and strategy of the company in maintaining “superior customer service, commitment to domestic manufacturing, and leadership in technological innovation” (NBAS, 2009).
The strength of New Balance can be also attributed to its strategic prioritization of product-brands that consistently and substantially compete with the leading footwear manufacturers, like Adidas, Reebok and Nike to name a few. In terms of product-brand positioning, it may be compared that the leading competitors continuously innovate their products and even diversify market operations or business lines, as exemplified by the impending merging of Adidas-Reebok.
On the other hand, retail markets have been also worked out in the domestic supply chain, comparing the same strategies of Nike and Reebok which are US-based manufacturers. With the available data from the case study, it was also highlighted that the financial performance of New Balance consistently “absorb” the domestic market competition, and even strengthened the “market clout” in international supply chain management as indicated by the export and import orientation in manufacturing, product supplying and foreign trade investments.
On the contrary, the assumed “weakness” of New Balance is central to its minimal promotional strategies, dealing with the product endorsements of famous celebrities. Although given the assumptions that New Balance prospers in “word-mouth” promotions [as pumped-primed by the direct selling in retail marketing], the marketing model can be the basis in assuming the weakness of New Balance in providing “weights” to position its product at the “upper ladder” of the industry and market.
To compare, the leading competitors, like Adidas, Nike and Reebok, are pulling up their marketing ventures in selective national events that features the “athletic legacy” of its product brands, exemplifying the lead-sponsorships in Olympic games and other athletic competitions.
However, the assumed “opportunity” in the increasing domestic and international market demands, the previously indicated industry estimates for 50 percent of the USD $32 Billion consumer spending for footwear with an average increase of 6.3 percent annually (Bowen, 2006), can be the advantage of New Balance to strategically explore the vast marketing potentials. For this particular assumptions, New Balance can posses the variability of options in dealing with its competitors in terms of the product lines, brands, market segment and scope on the types of consumers. Likewise, the vast marketing coverage [translated by the continuing consumption or spending in footwear purchasing] is relatively the essential opportunity amidst tightened competition in the market share.
Comparably, what Adidas-Reebok tandem wanting to position to compete with Nike may result “market spill-over” that New Balance can take an opportunity to venture out. In other words, the “market spill-over” may refer to the purchasing options of buyers, from which New Balance may position its products in terms of “alternative purchasing” or selective consumptions. With regard to the assumed “threats”, it may be predicted that merging and acquisition could be the “over exhaustion” of the market segments and industry sub-sector in footwear manufacturing.
For example is the consolidation of leading manufacturers in order to organize and mobilize a business cartel, wherein the monopoly may constrain the single proprietorship of a company to operate in retail and wholesale market. Another critical assumption is the controlling of the supply chain in raw materials, in which the production cost may abruptly increase and therefore hamper the production level of other manufacturers, pointing the scenario of derailed capital budgeting in both production and marketing.
This situation can be a remote consideration, but manifests in the globalization of industries. In retrospection, the consequence of Adidas-Reebok merging may encourage Nike to do the same alliance or shareholding with other firms which are below the competition. In which case, the shareholding may pattern the evolution of strength in the context of subsequent market partitioning or division. It may be perceived that once the market would be fully divided by numbers of competitors, New Balance may find its difficulty in managing its retail ventures.
Findings and conclusions It is found that James Davis is unperturbed on the seeming effect of impending Adidas-Reebok merging, on his thoughts; New Balance would remain stable in its business line, as well as the confidence of its associates, stakeholders and patrons. The situation of Adidas-Reebok merging was attributed to compete with Nike, being the closest competitor and leading over New Balance. Besides, New Balance measures its internal capabilities by clinging on its business culture, committing to domestic manufacturing and leadership in technological innovation.
In addition, New Balance has a consistent financial performance that leads its way in expanding within a diverse business environment, redefining the modality of its business operation as quantified by the retail-franchise partnerships. In conclusion, New Balance has able to redefine and describe its position or placement in the industry and the overall segment of the market. Recommendations Based on the strategic analysis of internal and external capabilities of New Balance, the “four P’s of marketing model” suggests critical reconsiderations.
Thus, the following bulleted lists of recommendations should be reconsidered: Continuing innovation of product-brands that will provide or create “purchasing alternatives” to consumers. The key result area in the “strategic product positioning” must be objectively realized at all times, such as the usefulness, quality, practicality, craftsmanship, customers’ service and product warranty. Conduct of regular product-market assessment to determine the relevance of product-brands in the acceptance and “taste” of the consumers. Like determining the marketability of the “New Balance Executional Excellence or NB2E”.
Conduct of strategic promotional activities to compete with the leading competitors’ use of celebrity endorsements, in which doing the same would provide New Balance the “edge” of consistent market presence. Explore the situational perspectives of merging and acquisition, being the “newest craze” of the business environment with regard to competition. New Balance may look at the situation of the emerging entrepreneurs to the industry and examine its capabilities for potential partnerships. Redefine the position of retail outlets in the global competition.
Redefining the retail outlets may provide New Balance with conceptual framework to strategically broaden its marketing outlets to determine expansive modalities or areas for diversification. Examine the product-brands and market lines from the lower segment of producers to enable tapping of potential products and technologies.
Bowen, H. K. , Huckman, R. S. and Knoop, C. I. (2006). ‘Case 27: New Balance Athletic Shoe Inc. ’. Harvard Business School. Retrieved April 14 2009. Chapman, A. (2005). ‘Michael Porter’s Five Forces of Competitive Position Model’. BusinesBalls. Com. Retrieved 14 April 2009 from http://www.newbalance.com/